U.K. Inflation Slowed in March as Country Entered Lockdown

(Bloomberg) -- U.K. inflation slowed in March as the nation entered lockdown and oil prices continued to tumble.

Consumer prices rose 1.5% from a year earlier, down from 1.7% in February, the Office for National Statistics said Wednesday. Downward pressure came from fuel and clothing prices. Core inflation eased to 1.6%.

The inflation outlook has been thrown into turmoil by the economic crisis wrought by the coronavirus pandemic, with restrictions to limit the spread of the virus forcing non-essential stores to close.

Bank of England policy maker Silvana Tenreyro said last week that it will be hard to interpret inflation data during the current crisis as price collection becomes far more difficult and spending patterns shift.

Nonetheless, inflation will probably fall below 1% in coming months –- less than half of the central bank’s target, she said.

Motor fuel prices dropped 4% in March. Clothing and footwear meanwhile declined 0.4% in a month that normally sees prices rise as new fashion lines are introduced. The fall was the first for the month since 2015.

The ONS said there was an increase in the proportion of clothing items on sale to 11.9% in March from 9.8% in February. In March 2019, by contrast, the proportion fell to 8.5% from 10.7%.

Most of the CPI data was collected on or around March 17, the day after Britons were urged to stay at home but before Prime Minister Boris Johnson imposed a formal lockdown on March 23.

ONS statistician Philip Gooding said panic buying made items such as flour, eggs and pasta more difficult to price than usual. Collectors were also more reliant on prices posted online as visits to stores were scaled back.

Economists expect inflation to come under further pressure in April as a reduction in the regulated energy price cap makes gas and electricity cheaper.

©2020 Bloomberg L.P.